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Thursday, May 30, 2013

Do nominee directors exist in the UK?

We often get requests from clients asking for nominee services. While it's easy to provide nominee shareholder services through a bare trust, you won't find a reputable firm offering nominee director services at a reasonable price. For under UK law, any director, even if he's called a nominee is responsible for the actions of the company and in the event of any wrongdoing by the company the nominee can be prosecuted. You can find some vendors who will provide such services for around £400 per year but they are based in jurisdictions such as Cyprus, Mauritius or the UAE who do not have extradition treaties with the UK and quite frankly do not care. A lot of these nominees are ex Sark Larkers who caused the change in UK law around 1997 for their illegal activities and who have just moved offshore. Moreover, no reputable bank will offer any facilities at all if any nominees are in place.
People sometime forget that the UK is not a tax haven. Confidentiality is not the main attraction of the jurisdiction. Low taxation, absence of red tape, flexibility of the work force are the main reasons people set up shop here. Since 2006, Companies House requires that every company created have at least one natural director (ie. a physical person, not a company) and that director needs to disclose his name, date of birth and personal address (even if the last two are not disclosed to the public).

In summary, while the concept of nominee director is quite common in most offshore jurisdictions, for all practical purposes, it does not exist in the UK anymore. And if you've been told otherwise by some formation agent, be worried...